05 October 2012

MPs criticise public sector tax arrangements


Jonathan Werran

Whitehall’s culture of reliance on ‘hired guns’ – specialist interim employees brought in to cover a lack of in-house expertise within departments - must end, an influential parliamentary spending watchdog has demanded.

An investigation by the Public Accounts Committee (PAC) into ‘off-payroll’ arrangements stated more than 2,400 central government contractors were invoicing Whitehall employers using service companies – a practice arousing suspicions of complicity in tax avoidance.

Additionally, the PAC discovered the BBC has around 25,000 off-payroll freelancers on their books, who avoid paying tax at source, 13,000 of whose number include TV and radio broadcasters.

The committee’s inquiry follows the findings of an earlier review by the Treasury into off-payroll arrangements. This in turn was launched in the aftermath of claims made by BBC’s Newsnight programme in February that the chief executive of the Student Loans Committee, Ed Lester, had been paid through a personal service company.

His immediate employers and the company’s sponsor department, the Department for Business Innovation and Skills were at fault for agreeing a ‘flawed’ business case which ignored ‘the need for officials to uphold the highest standards in public life’, the Committee found.

Any future use of ‘off payroll’ schemes by government freelancers must now receive prior Treasury approval, and only in ‘exceptional circumstances’.

PAC member Richard Bacon said ‘flawed thinking’ lay behind the failure to consider what external experts would demand in exchange for filling senior, high-pressure Whitehall jobs.

‘These deals highlight Whitehall’s over-reliance on “hired guns” – interim staff brought in to make up for the lack of specialist skills in the civil service,’ said Mr Bacon.



Your comments

I thought that the Government wanted a smaller public sector. This is the result.

Mel Harwood, Street Lighting Manager, Dudley MBC, Added: Tuesday, 9 October 2012 09:32 AM

Actually a lot of contractors have other arrangements befitting their self employed status, however the BBC are paying full time employees under a tax beneficial arrngement. If they want to wrk outside their main contract of employment then they can use their companies but like the Civil Service these are paid up employees and should be subject to the normal rules of employment. They aren't interims or consultants and it's not as if they aren't wods anyway.

Stephen Reimer, Added: Monday, 8 October 2012 05:13 PM

People who are self employed/contract pay tax and national insurance through their umbrella companies at the same rates as PAYE employees. The difference is, if they work away from home they can offset the costs of going to work against tax. This should be available to all. If we have to get on our bikes we should be able to earn a living wage. I would welcome setting off the cost of my season ticket against tax. (?2,700 per year, 20% of my take home pay & soon going up by more than my pay!)

Diane Rotherham, Senior engineer, Amey, Added: Monday, 8 October 2012 08:56 AM



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